Cause and effect - Woolf reforms are affecting maritime litigation

Cause and effect

SOMETHING is wrong.

It is much too early to say how the Woolf reforms are affecting maritime litigation in the UK. It is not too early, however, for the Swedish Club to warn that arbitration is losing its attractiveness as a means of resolving disputes. And the two things are not unconnected.

The club makes the point that high costs and delays are increasingly associated with arbitration, while the Woolf reforms are meanwhile expected to reduce the cost of court action. It is, then, likely that the Woolf reforms will see the courts providing tougher competition, and the increasing use of high court-style legal tactics in arbitration can only accelerate the trend.
"Arbitrators should respond by adopting certain reforms," says the club, "especially measures to promote speedy and lower-cost decisions. Should this fail to happen, attitudes towards arbitration will harden."

Hold on. The rationale behind the Woolf reforms is that litigation should be seen as a last resort, and that other, quicker commercial solutions - for example, arbitration - should take precedence. Making the courts more attractive to the parties than arbitration was not supposed to be part of the deal.

Incongruously, it seems that arbitrators could learn something from Harry Woolf.

Victory at a price

ALL this may give the impression that the courts are a cut-price option for prospective maritime litigants in the English courts. They are not.

The International Transport Intermediaries Club (ITIC) has recently highlighted the high cost to shipbrokers and other intermediaries of litigation. The costs can be prohibitive for the uninsured, irrespective of whether the case is won or lost.

In the latest issue of its ITIC Claims Review, the club notes that the average overall defence costs in a three-day trial in the London High Court of a fairly routine claim against a shipbroker are currently about $100,000. If the shipbroker loses the case, it also becomes liable for between 75 and 80 per cent of its opponent's costs, which would be for a similar amount, bringing the total cost of settling the dispute to about $180,000.

These hypothetical costs are based on a survey of ten London solicitors. They do not include the amount of the claim itself. And ITIC points out that the cost of arbitrating shipmanagement claims is even more expensive, rarely amounting to less than $300,000.

ITIC quotes the case of a ship agent which accrued legal costs of $135,000 in successfully defending a dispute in the Singapore courts. Only $85,000 of that amount was recovered, bringing the cost of "victory" to $50,000.

In many jurisdictions other than England, the winning party is not able to recover the major part of its costs, and ITIC notes that its members often have to pay substantial unrecoverable costs. Even in jurisdictions where costs are recoverable, the shortfall can be "substantial".

ITIC makes the fair point that, in an environment where intermediaries such as agents and brokers are often regarded as soft targets by other shipping and trading interests, the cover it provides in respect of the payment of legal costs may be crucial. And there is perhaps a wider picture that we should be looking at.

P&I and defence clubs provide shipping interests with a sleepeasy option in connection with the payment of legal costs. That is only right, considering that it is the clubs who are expected to pay the claims. But perhaps we should be listening more attentively to what the mutual insurance industry has to say about legal costs. He who pays the piper should, after all, call the tune.

Small and quick

NOBODY really believes, of course, that arbitration is all bad. Properly conducted, and given the will on the part of the parties and the arbitrators to reach an equitable solution in good time, it is largely both effective and cost-effective. Certainly, for smaller disputes, there can be no denying the initiatives which arbitrators have taken. Small claims procedures are an established part of the package on offer in many leading centres of arbitration, and it is good to see that Japan is the latest country to embrace this ethos.

The Tokyo Maritime Arbitration Commission, concerned that it has been taking an average of five months for arbitrators to give their awards, has brought in a small claims procedure for claims under five million yen. Not the least encouraging point about this development is the fact that an arbitration body is registering concern at the fact that it is taking five months to render awards. It is not unknown for some arbitration bodies to boast about such a rate of progress.

About the size of it

IF size is indeed not everything, why does everything keep getting bigger? Insurers and lawyers are the latest masters of corporate engorgement. Most recently, for example, Clifford Chance voted to merge with New York-based Rogers & Wells in a deal which also involves a German law firm whose name is too long to mention here.

It is no surprise to find that the details of what is being described as the world's first billion-dollar practice have been accompanied by trumpeting from Clifford Chance's senior partner about clients not wanting time delays and inefficiencies, and not wanting to deal with half-a-dozen legal firms around the world. "What they want is one firm with the capacity to be a one-stop shop."

I have no reason to suspect that this is not what the corporate clients of big law firms really want, and it certainly makes more financial sense than one firm opening up a string of offices worldwide. But how big will the letterheads of these billion-dollar firms be - for make no mistake, there will be other mega-deals - and who will make the tea?

This thrusting after size is unlikely to spread to maritime law firms. Most big law practices regard maritime as fairly small beer these days, alongside the massive corporate and M&A stuff. One looks, for example, at Herbert Smith closing down its shipping department just recently.

Certainly the heady days of the 70s and 80s are now gone for maritime lawyers. There are a variety of reasons for that. Maritime has traditionally been an expensive form of litigation, but costs have been driven down by a number of factors, including pressure from the P&I clubs, greater use of inhouse expertise by insurers and shipowners, and the increasing competitiveness of the market, where firms which were breakaway fledglings just a few years ago are now sufficiently established to take lawyers from other established practices.

Few maritime lawyers have put up their fees - or their feet - for the past five years. This militates against representation of the many by the few, and must mean ultimately that you have less chance of facing yourself in court one day.

Fair comment

SHIPPING is definitely not a war between the sexes, which is an outdated topic. The opposite sex is an ally, not an enemy. Women have enough battles to fight without taking on the male species as well. A lot of work has already been done on account of the next generation of women in shipping. Their future will be easier because the path has now been paved.

Don't take my word for it. I am just paraphrasing Fulvia Linari, president of the Women's International Shipping and Trading Association (WISTA), who is interviewed in our Body Talk section in this issue. Fulvia is confident that shipping will catch up with the rest of the working world over the next decade.

Her sentiments would no doubt be endorsed at the Miami-based ship brokerage firm S Danoff USA Ltd, where the five-strong workforce is entirely female. The president of the firm is Michelle Danoff Merlin, which is a fine name. Michelle admits that being female hasn't hurt her in business. "It has made me very easily recognisable," she points out. "There's still a novelty factor in being a female voice on the other end of the phone."

That novelty factor may well disappear, if WISTA is right. I hope so. Another woman in the Danoff office, meanwhile, says, "The job is great fun, especially the negotiating. The only downside is the occasional rough language."

I take the point, but I suppose the men will get used to even that, given time.

Big Apple lore

WHAT better place to kick off the MLA centenary celebrations in Manhattan at the beginning of May this year than at the elegant boathouse in Central Park? Good food, lovely setting, and almost everyone who was anyone there. And the US MLA was inspired, once again, in its choice of venue for the main event of the week - a black-tie buffet at The Museum of Modern Art (MOMA).

If mingling with over 1,400 maritime friends from around the world, with the odd Cezanne thrown in for good measure, is your idea of fun, then this was a great do. The downside was that there were so many people there that meeting up with colleagues proved difficult. But mixing with the flow of the crowd seemed to be the preferred option, and a welcome departure from getting stuck at one table for the whole evening.

Charles (Terry) Haight, senior judge of the US District Court for the Southern District of New York, invited guests to a maritime exhibition, lecture and reception at the court house towards the end of the week. Judge Haight and The Hon Mr Justice David Steel from London shared the platform. Both traced the history of the silver oar, used in admiralty courts on both sides of the Atlantic, a tradition that stretches back for six centuries. The romance of the sea, and the vocational calling it seems to inspire among seafarers, shipowners and maritime lawyers alike, was captured beautifully in the exhibition.

The Blue Ribband ocean liners used the North Atlantic as a watery racetrack for over a hundred years from the middle of the last century to the middle of this one. It was the Americans, needless to say, who finally ruled the waves by creating the fastest ocean liner of all time, appropriately named the SS United States. The announcement that this vessel had snatched the Blue Ribband away from the Queen Mary "seemed to exemplify the transfer of prestige and power from the UK to the US in the aftermath of the second world war," reflected David Steel in the introduction to his speech at the court house.

While the exhibition signalled the official end of the MLA centennial festivities, the historic event of the week took place the following day at the offices of the American Bar Association. Members and foreign guests constituted a packed audience for the agm, which was chaired by the president who, after the official business was done, handed over to past-president George (Bunky) Healy III. He chaired the second half of the morning, which was dedicated to capturing the stories and opinions of a vast array of delegates who shared their experiences of the US MLA. One of the leading lights was Nick Healy, who busily signed copies of this magazine with his picture on the front cover. President of the CMI, Patrick Griggs, paid tribute to Nick, who is just ten years younger than the organisation itself and who has been a member of the US MLA since 1938.

Best laugh at the agm came from The Hon Mr Justice Steel. "It may strike a chord with Judge Haight if I tell him about a dog that we gave to my elder son last year," he said. "For reasons that are too complicated to go into, it had been named Counsel. It was rather unruly and my son sent if off to be trained. After a suitable gap, my son went to visit the trainer to find out how things were going. He was startled to find that the dog's name had been changed to Judge. 'Why the change of name?' my son innocently asked. 'Because,' said the trainer, 'I cannot do anything with him, he just sits there all day doing bugger all but bark.'"

Outside the centennial celebrations, the usual array of lunches, dinners and parties went on. The delights of New York cuisine were on offer, from Italian in Greenwich Village to Japanese off 5th Avenue (the favourite in Times Square temporarily closed as building work takes over), as well as the theatre and the city's many museums. Best meal of the week for the Maritime Advocate was after the agm at the bustling and popular Oyster Bar in Grand Central Station. For delicious seafood and ambience, it couldn't come more highly recommended for your next visit to the Big Apple.

Barcelona beckons

IF the thought of two thousand lawyers in one place doesn't upset you, then book now for Barcelona. The Catalan capital, basking in both the summer sun and its status as Europe's most exciting city, will be hosting the International Bar Association's annual conference from September 26 through to October 1.

Maritime lawyers will by no means be in the majority, but they get a fair slice of the programme. Christian Breitzke, from Hamburg, will chair maritime sessions on ship leasing and financing, cargo handing liabilities, guarantees and letters of undertaking and current maritime developments. As these sessions neatly bracket the week, and you couldn't possibly miss any of them, that leaves Tuesday afternoon, all day Wednesday and all day Thursday for some cultural activities. The IBA has thoughtfully provided some options for trips to the Cordoniu wine cellars, the incredible mountain monastery of Montserrat and a Jose Carreras concert. Barcelona-based Ignacio de Ros tells us he is laying on a special programme for the maritime section which involves a difficult day sampling wines in the National Park of Montseny.

It all sounds tough, so I recommend you leave some time for sightseeing. You will never see another sight like Gaudi's Sagrada Familia cathedral, and for sitting in the sunshine watching the strollers on La Ramblas. If you can stay the weekend, go to the square in front of the old cathedral, and join in the delicate steps of the Catalan's weird but graceful dance, la sardana. And if you can't, take good shoes, a thick wallet and a desire to have fun while you are learning and networking. This is going to be serious fun.

For more information contact: International Bar Association
Tel: +44 171 629 1206
Fax: +44 171 409 0456

Starling revelations

IT is generally a mistake to write a letter to the press complaining about an item that has been published. Wise counsel will prevail upon you to write the letter and throw it away. That way you will feel better, rather than the rest of the world feeling better at your expense.

That said, the maritime press must have fewer good readers' letters than any other trade sector. I don't know why that should be. Ennui, perhaps? Complacency? Complete satisfaction with everything that is printed? I doubt it.

All the more reason, then, to give wide circulation to a good letter when one appears. Here is Michael Marks Cohen, of New York law firm Burlingham Underwood, writing recently to the editor of Lloyd's List, about an article which compared certain members of the shipping industry to various animals.

"I note that (the author) failed to mention maritime journalists. I personally see an analogy between maritime journalists and starlings. These noisy birds, you will recall, are well-fed by friendly people who in some cases get only a large cleaning bill to show for their generosity."

Those who know Michael - and who doesn't? - will know that his tongue will have been fairly deep in his cheek as he wrote these words, probably in fountain pen, probably on an interesting postcard, probably postmarked at the United Nations building in New York.

Michael has always been friendly to journalists, has always gone out of his way to help them, has very often made the first move, the initial introduction, the offer of lunch. He does it, too, without vainglory and without seeking editorial favour.

As far as I know, Michael's cleaning bills are not too heavy. He enjoys - more than he would admit - being at good-natured loggerheads with industry pundits. I can do no better than recommend to him the immortal verse of Humbert Wolfe, who wrote:

"You cannot hope
to bribe or twist,
Thank God! the
British journalist,
But seeing what
the man will do
unbribed, there's
no occasion to."

Super

TWO letters in the same publication on the same day is a bit much, but it's true. There, alongside Michael Cohen's starlings, was a letter from the managers' agents of the UK P&I Club in the north-east of England, taking objection to the use of the term "the world's first super-mutual" to describe the proposed merger between the Britannia and Standard clubs. This is an example of a letter best left unwritten, and not for the reason that the merger subsequently fell flat on its face.

There is nothing is to be gained by complaining about a finite term being applied to one of your competitors, particularly when the term relates to mere size, and not to quality. Bleating on about your own innovative service that others can only copy, and claiming for yourself the meaningless, empty accolade accorded your competitor, is as good a way as any to debase yourself in front of an international readership. This is a situation which calls for style and judgment, not preciousness about size.

Boxed off

I AM not against new words. Without them, the language would be moribund. But I am against ugly words invented, so far as I can see, out of sloth and ennui. I give you the Improving Packaging Openability & Functionality conference, held in Orlando, Florida, in May. It's bad enough that we have to stuff a box in shipping circles, without now having to assess its openability. Pandora would be mortified.

A pain in the neck

I NODDED sagely when I read recently that mobile phones can scramble your brain. I have known for some time that this is true, and have said so on a number of occasions. Sadly, nobody would listen to me, but now that it has been in the cheaper tabloids it is suddenly pukka news.

Predictably, those who cannot make a simple train journey from the sticks to London without trying to talk the leg off an iron pot have reacted to this dire warning of brain damage, not by ditching their phones, but by donning headsets. Does it never occur to these wretched people to stop talking for five minutes, and to let the rest of the world get a word in?

Coincidentally, a press release crossed my desk this week warning of the dangers of telephonitis, which is a type of repetitive strain injury comparable to a pain in the neck. The cure? Get a headset, of course. And there is good news. "Headsets are no longer cumbersome, old-fashioned or expensive - in fact the range is so diverse you'll have problems in choosing." I won't.

Legalspeak

JOKES about lawyers are ten-a-penny. They are also funny - sometimes. I have just received a fresh batch by email. My favourite concerns the defendant who was warned in court, "All your answers must be oral from now on, OK?"

Q. "What school did you go to?"
A. "Oral."